De Jager Says Greece Needs to Make Fiscal Reforms Immediately

By Jana Randow and Sara Eisen -
Oct 14, 2012

Dutch acting Finance Minister Jan Kees de Jager said Greece needs immediate fiscal changes, three
days after International Monetary Fund chief Christine Lagarde
said the nation should get two more years to meet its targets.

“What we expect Greece to do is implement the economic
reforms without further delay,” De Jager said in an interview
yesterday with Bloomberg Television in Tokyo, where he attended
the International Monetary Fund meetings. “Yes, they are
painful but it’s really important that they’re doing them.”

Greece and its international inspectors are racing to find
agreement on economic policies ahead of the Oct. 18 summit of
European Union leaders. Prime Minister Antonis Samaras is
seeking to spread pension and wage cuts over four rather than
two years to meet deficit-cutting targets and smooth the impact
on an economy set to shrink for a sixth year in 2013.

Lagarde, the IMF managing director, said on Oct. 11 Greece
should get two more years to meet fiscal targets and suggested
debt reductions are needed before a 130 billion-euro ($168
billion) bailout can be approved. Extending the amount of time
Greece has to meet reform targets means European donor states
would have to provide more funding, European Central Bank
Executive Board member Joerg Asmussen said Oct. 12.

‘Perverse Incentive’

“When they will do all these measures, more money isn’t
needed,” De Jager said. “More money because of a delay in the
measures, the economic reforms, is a perverse incentive for
Greece because we need them, in all our interest, to do as early
as possible all the economic reforms.”

While there is “still room for improvement on the
structural reform side in Greece,” Spain is already
“implementing a lot of economic reforms, a lot of austerity
measures,” De Jager said. That’s why a bailout “is not a
question for Spain at the moment,” he said.

Standard & Poor’s cut Spain’s debt rating to one level
above junk last week despite the government’s announcement of a
fifth austerity package in less than a year and also the
publication of details of stress tests of its banks.
Creditworthiness concerns have grown since the government
requested as much as 100 billion euros in European Union aid in
June to shore up its lenders and amid signals that the deficit
target is in jeopardy.

“Spain is doing a lot of work,” De Jager said. “It will
take some time for the positive effects. We have to wait for a
few moments to see the positive effects come into place but they
will be there.”